Banks are to begin transferring loans to the National Asset Management Agency (NAMA) by the end of February, according to the organisation which is overseeing the new agency. NAMA is awaiting approval from the EU.
The chief executive of the National Treasury Management Agency, John Corrigan, told reporters: 'There is no reason to believe there will be any substantial delay in the EU approval'.
He was speaking after attending a meeting of the Oireachtas Public Accounts Committee, which considered the Comptroller & Auditor General's annual report on the National Pensions Reserve Fund for 2008.
Mr Corrigan was asked by the committee about the return to the State from the €7 billion it had pumped into the banks so far.
He explained that there would be an 8% return on this investment. He said there was an interest rate of 8%, with Bank of Ireland due to pay this on February 20 and AIB on May 13. This amounted to €280m each.
But Mr Corrigan said that because the viability plans for both banks are being reviewed by the EU Commission - because they were in receipt of State aid - the banks were not likely to be able to pay these coupons on those dates.
Asked by Deputy Roisín Shortall when the coupons would be paid, Mr Corrigan said it depended on how quickly the Commission carried out its analysis.
Bank of Ireland debt swap to raise €400m
Bank of Ireland expects to raise around €405m in capital after completing a debt exchange.
Bank of Ireland, which last year received a €3.5 billion injection of capital from the Government, offered debt with a nominal value of €2.9 billion in exchange for fresh 10-year paper. The bonds have been trading significantly below their original prices.
BoI said there had been a 56% take-up of the offer, which meant debt with a value of €1.62 billion was swapped for new debt of just under €1.2 billion.
Last year, the bank also made use of a weak debt market to buy back paper worth more than €1 billion, and signalled last month it could buy back more.
But Bank of Ireland is expected to need considerably more capital after it transfers up to €16 billion of assets to the National Asset Management Agency.
